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Money Times - Febuary 21, 2017

Posted by Jill Kerby on February 21 2017 @ 09:00

HOW MUCH WOULD YOU – A LANDLORD - PAY FOR PEACE OF MIND?

Finding an affordable place to rent in Ireland – especially in the main cities and all of the greater Dublin area - has become such a political hot potato that most politicians I know prefer conversations about the state of the health service or Brexit.

With the average Dublin rent now rising by 15%, and between 10%-13% in the four other main cities. On February 1, 2017, there were just 4000 homes available to rent across the entire county, reports Daft.ie and while this is a 10% increase on the same date last year, it isn’t much better than in April 2007 when there were only 4,400 places to rent but a far lower number of people seeking rental accommodation.

The surging rental values have been clipped for existing tenants by the 4% rent increase cap that applies from January 2017 in the list of Rent Pressure Zones in Dublin and around the country.

The new regulations mean that fewer people will have ended up homeless after being unable to pay large increases once their two year rent freeze was up, but it’s done nothing to help others find an affordable home:  only a surge in affordable high rise accommodation in the cities can do that, and this is still some way off as are the implementation of other proposals to build more social and private houses and apartments; to renovate empty spaces above shops and businesses; force local authorities to renovate and repair (more quickly) the thousands of their own idle, vacant properties and to impose levies or surcharges and taxes on similar empty, abandoned and derelict private properties.

And while this is a very tough time to be an aspiring or existing tenant, especially for those in the latter category with limited budgets and the risk of evictions when their property is sold to vulture funds, the property nightmare continues for many of the 300,000 amateur landlords in this country.

Negative equity, mortgage arrears, high property-related taxes and charges have taken their toll, though rising capital values have provided an exit route for increasing numbers.

Nevertheless, stories still abound of tenants who have stopped paying their rent, have caused expensive damage, lost their jobs and have nowhere else to go, etc.  Such is the pressure at the Rental Tenancies Board that disputes can take up to five months to be resolved.

Both sides have their champions – the RTB as well as private agencies like the Residential Landlords Association and Threshold - but now a new commercial service has become available to landlords to help cover the costs of disputes and rental income default.

RentAssured.ie is an on-line insurance provider for private landlords with annual rental income of between €6,000 and €48,000.  The policy covers tenant rental defaults worth up to 11 months worth of rent; it offers rent dispute legal assistance worth up to €5,000 plus VAT; and compensation worth one month’s rent for malicious damages. It also offers two annual, free, pre-rental tenant checks by the credit service, Stubbs Gazette. The policy costs the equivalent of 2% of the annual rent. (For an €18,000 rental stream, that is, €1,500 x 12 months, the premium would be €360 per year.)

Here’s an example of how it works:  You own a three bedroom suburban house that you have been renting to a tenant for €1,500 a month. The tenant stopped paying his rent three months ago over a row about some malicious damage to the property- broken doors and windows that cost €500 to repair/replace.

The dispute went before the RTB, but just as it was to be heard – two months later – the tenant disappeared.  You have lost five months rent, less the one month deposit, plus the €500 for repairs and the €1,000 you spent taking the case to the RTB.

According to Robert Kelly of RentAssured.ie, assuming that this landlord met their policy qualifications – they had sought references, (in the case of a new tenant, Stubbs would do the check); provided a lease; took a one month deposit; reported the damage to the Gardai and followed the RTB landlord dispute protocols – the RentAssured policy would have paid out four of the five months lost rent, the €500 malicious damages and the €1,000 plus VAT dispute/legal costs (also done in association with Stubbs.)

With rental property is such tight supply, not every landlord will need a service like this, since there is a 60 day delay before claims can be made (as part of the initial RTB dispute period) but “it does provide a degree of comfort for landlords from a potential financial loss from rent default or damages” that they would otherwise not have had, says Kelly. 

But ‘once burned, twice shy’. Amateur landlords who haven’t been able to unload their property, but have had poor tenant experiences might want to carefully weigh up this insurance premium against potential future losses.

 

 

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